What's keeping Calgary from opening more daycares? Real estate, for one thing

Every week, Alistair Corbett gets a flurry of inquiries from people in Calgary who either want to open a new daycare or expand an existing one. 

"I almost don't want to open my email some days with the number of inquiries that are coming through," said Corbett, a senior-vice present with the firm CBRE, who helps businesses find commercial real estate space.

Interest in the daycare sector has been picking up since Alberta signed a federal-provincial child-care agreement in 2021. The province set a goal of adding 68,700 child-care spaces by March 2026 and says so far it's created 31,000.

Corbett said there's been an "incredible run" of new daycares over the past few years. There were 12 last year alone, he said. 

The problem is that, at this point, most of the commercial real estate in Calgary that can be easily used as daycare space has already been snapped up, he said. 

That could make it difficult to add more daycare capacity going forward. 

"The low-hanging fruit, the easier ones to do, have gone," said Corbett, who noted about 10 per cent of the leasing inquiries he receive last year were related to daycare space. 

At the same time, demand from parents seems unlikely to evaporate any time soon. Alberta is a young province, with a median age of 38 compared to the national median of 40, according to Statistics Canada. 

Since the pandemic, there's been a particular influx of young people moving here, drawn in part by the search for relatively affordable housing. According to ATB Financial, the bulk of recent migrants to Alberta have been under 40.

"The median age in Alberta actually fell slightly this year for the first time since at least 1972," wrote chief economist Mark Parsons in a September report. 

The province has also announced further changes to subsidized child care to make fees more predictable. Starting April 1, parents will pay a flat rate of $15 a day for children kindergarten age or younger, said Minister of Jobs Economy and Trade Matt Jones. 

"Frankly, there's going to be even more interest … we have a growing population," said Jones, speaking to reporters during the child-care announcement.

Why is it so tricky?

Part of the real estate conundrum, said Corbett, is that daycares must have an outdoor play space either on the property or easily accessible to it. It also has to accommodate at least half the daycare's capacity.

"Not every location can accommodate that outdoor play area, because you're either losing parking or you need a green area," said Corbett. 

Sarah Hunter, who owns the Imagination Tree Childcare Centre in Calgary, agrees the play space requirement can be a challenge.

"Some real estate — I would say most — doesn't have the capacity to be able to provide that," said Hunter, whose centre is full to capacity and has a "fairly long waitlist" of interested families. 

But Hunter said the issue goes beyond real estate. Cost is another obstacle to expansion, she said, as is finding qualified staff.

Permits and licensing can be another hurdle. At one point, Hunter said, she found a suitable location but the paperwork didn't come through quickly enough for her prospective landlord.

"The landlord wasn't willing to wait those three or four months in order for me to get everything into place," said Hunter. "I feel like when you do finally find a space, there's more hurdles to jump before you can actually sign that lease."

As part of the province's announcement, it has also committed $53 million to help non-profit and public childcare providers build, upgrade or expand their spaces. The funding has a particular focus on areas with high needs for child care, such as rural and remote communities.

Hunter suggested governments could look at streamlining the various steps in obtaining health, fire and licensing approvals, or fast-tracking applications from child-care operators, to help them sign leases more quickly. 

As for Corbett, with CBRE, he said with interest rates coming down there is more commercial real estate being delivered to the market. Still, he said, it will take time for enough new real estate to be built to make a dent in the current space crunch. 

"A typical daycare might bring on maybe space for 100 kids at a time," he said. "[There's] just a tremendous amount of daycares that are really needed."